Sony Internet arm sets $286.4 million IPO

By Reuters

Published: December 8, 2005, 5:09 AM PST

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TOKYO--Sony Communication Network, an Internet subsidiary of Sony, set its initial public offering price at the top of expectations on Thursday, valuing the flotation at $286.4 million.

SCN, the operator of the So-net Internet service provider, said its shares would be sold at $2,810 (340,000 yen) apiece. The company had previously set a tentative IPO price range of between $2,645 (320,000 yen) and $2,810.

The IPO price values the company at 8.5 times expected earnings, against 28.7 times for Internet Initiative Japan, another Internet provider. SCN's other rivals include Fujitsu's Internet services unit Nifty.

SCN's shares will start trading on the Tokyo Stock Exchange's (TSE) Mothers market for start-ups on Dec. 20. Sony listed SCN tracking stocks, designed to reflect the unit's enterprise value, on the TSE's first section in 2001.

But the electronics maker, which has been struggling with weak sales in its core consumer electronics business, ended the tracking-stock program as of Dec. 1, aiming to take SCN public and allow the Internet firm to operate independently.

SCN's share flotation, lead-managed by Nomura Securities, was also aimed at helping the company raise funds to expand its fiber-optic service.

Under the share offer plan, SCN will issue 20,000 new shares. Sony and another unit, Sony Finance International, will also offer a total of 70,000 existing shares in SCN, reducing the Sony group's holdings of SCN to about 65 percent from 100 percent.

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Strong investor appetite for the shares during book-building led to an additional offering of 12,000 shares under an over-allotment scheme, bringing the total IPO size to $286.4 million (34.68 billion yen).

SCN had some 2.81 million subscribers to its So-net connection or other services as of Sept. 30.

The company said it expects to post a 150 percent rise in group net profit to $84.3 million (10.2 billion yen) for the current fiscal year to March on sales of $359.6 million (43.5 billion yen), up 10.7 percent.